Indian e-grocery market to witness growth in tier 2, beyond in 2023: Report

The Indian e -grocery market, primarily dominated by slotted delivery, is set to witness growth in tier 2 and beyond regions, with horizontal players leading the way while the adoption of quick commerce is expected to remain steady, a report has shown.

The significant growth in the Indian e-grocery market between 2019 and 2022 can be attributed to the adoption of quick commerce in cities.

"The expansion of eGrocery is expected to continue in tier 2+ markets, driven by dominant players," according to RedSeer Strategy Consultants.

e-grocery, which remained a minuscule fraction of the total grocery sales across regions until 2019, experienced a surge in demand due to the pandemic lockdowns.

As a result, while the online penetration in e-grocery was steadily increasing in the Indian market, Indonesia and MENA witnessed skyrocketing trends in adoption.

"Fast forward two years and the trends remained upward, with MENA and Indonesian regions experiencing over 100 per cent CAGR from 2019 to 2022, while India witnessed a 66 per cent CAGR," the findings showed.

Consumer preferences driven by multiple factors such as convenience and habit leave much room for unlocking value in the e-grocery space, according to the report.

"Players in the eGrocery space need to work on key principles to unlock values, such as a creative last-mile model, optimised warehousing and supply chain, targeted range construction and merchandising, optimised price positioning, and test and learn approach," it elaborated.

As quick grocery delivery under the 10-15 minutes time period becomes the new growth arena globally, India's quick commerce market is all set to witness 15 times growth by 2025, reaching a market size of nearly $5.5 billion.

The total addressable market for quick commerce in India stands at $45 billion, and urban areas are driving this market on the back of mid-high-income households, according to Bengaluru-based market research firm.